Success Factors of Rideshare Business Model and Future Forecasts
Note: This article was updated on January 13, 2020
No other sector has revolutionized as much as urban transportation in these first two decades of 21st century. Many innovative businesses emerged taking the leverage of smart technologies. Rideshare business model is becoming one of the most successful models besides on-demand taxi and bike taxi services.
This article explains rideshare business model and explores the reasons for its success.
What is Rideshare Business Model?
Over 80% of vehicles in metropolitan roads around the world have a single passenger. This problem is creating a massive inefficiency because each of these vehicle drivers is consuming road space of entire vehicle.
Moreover, this problem persists in traditional taxis too whose number of passengers is mostly not more than one at a given time. Consequently, the contemporary century-old traffic model is becoming unsustainable.
Public transit systems (PTS) including rapid buses and subway trains are only a small part of solution. A commuter cannot book a seat or estimate the arrival time without traveling to stations. Most PTS offer the facility of phone call or website.
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However, smartphone apps present the most effective solution with remarkable user experience, unlike websites.
A commuter can book a seat with rideshare app while at home and find the nearest pickup point. Public transport vehicles only stop at prefixed routes. In contrast, rideshare apps allow dynamic stations. The vehicle stops at locations of riders’ choice while remaining inside the radius of operation.
Why is Rideshare Transport Model Successful?
Growing traffic congestion is not the only challenge addressed by rideshare businesses. They are also ensuring low-cost solution to commuters with better profit margins for service provider.
One drawback of taxi business is the fact that drivers remain idle most of the time. This problem burns excessive fuel and consumes more time without returning enough.
Cloud-based rideshare model ensures that more people use single vehicle. This way, per passenger cost drops down. More people traveling in the same ride enable each rider to distribute cost.
In essence, drivers are not getting a lesser amount of money per ride. Instead, the increased utilization enables them to allow passengers pay significantly less.
Research indicates that rideshare services earn substantially more per hour of operations than taxi services. Thus, rideshare business plan is successful in perspective of passengers, drivers, and service providers.
Empowering Both Passengers and Drivers
Like one of the features in Uber business model, most rideshare apps enable ratings for both passengers and drivers. This dual-rating and feedback facility improves user experience. The facility develops a sense of understanding among the two stakeholders.
Any effective rideshare app would act on ratings and feedback. Drivers with poor ratings either face permanent or temporary termination. Those with decent ratings get bonuses.
Similarly, the apps also penalize passengers with low ratings. Usually, the regulators lower the number of promotional offers to such customers. In intense cases, customers may also face closure of their account.
Advanced Booking Rideshare software
As mentioned earlier, booking a seat through smartphone is mostly unavailable in public transit systems. Rideshare model allows passengers to reserve a seat in the vehicle of their choice. This feature reduces the pickup time and allows passengers to prepare in time accordingly.
The cost of traveling during peak traffic hours often goes extremely high. Thus, seeking a taxi is rarely an option for commuters.
Since the stops are dynamic, rideshare vehicles can far cover more areas than traditional public transport system. Sharing model also allows changing areas of operations instead of sticking to the same radius.
Tracking and Time Estimation
Customers have the facility to get the estimated arrival time of vehicles. They can also view the route of vehicles to find the nearest pickup point.
Rideshare is unable to pick riders at their doorstep unless the pickup location falls on driver’s route. However, it ensures to reduce the walk time as compared to public transport. Customers prefer walking few steps out of their homes instead of paying many times more by acquiring a taxi.
Smartphone Payment Facility
The inconvenience of keeping hard cash or credit card is a thing of past. Now both of these payment methods are merely options. Customers mostly use the in-app wallet which allows filling balance ahead of ride or paying later.
Like other features, this facility saves time and ensures that passengers have less number of things to care about.
Safety and Dispute Settlement
One of the most notable facilities is the security of passengers. Unlike taxi rides, shared mobility allows monitoring staff to track rides for surveillance. Any efficient rideshare app provides the ability to store data of customers and drivers. Admins can access this data for accountability purposes.
Furthermore, the apps also allow settling disputes in a highly effective way. Traditional taxis do not save minute details in record of rides. In contrast, shared apps keep track of the areas traversed and conversation between driver and rider.
However, the apps need to ensure data security and avoid breaching privacy unless a dispute settlement requires so.
Forecasting the Forthcoming
Some vehicle manufacturers are designing vehicle interior, particularly for ridesharing businesses. Such cars and vans will feature seats with increased security features.
Besides, level four autonomous vehicles are kicking off the commercial operations. Alphabet’s Waymo is one of the first rideshare services featuring autonomous vans.
Many companies are planning to offer hopped rides in the upcoming times. These rides will enable passengers to reach the destination by hopping more than one vehicle under same booking.
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